new
equipment. PhD. Craig. etc. CPE 4
.Proposed Method Implementation
 We will look at at a variety of decision making
tools developed to assist the analyst choose
the “best” (appropriate) alternative
 The next step is selling the proposed method
 Most important. etc. management’s tight purse
strings. job changes.
20 March 2018 Brian N. safety. ergonomic. since if not sold  not installed
 Can be true for work method changes.
 Selling can be tough  people are resistant
to change (Ego's).

Craig. CPE 6
. decreased downtimes
(increases in operational availability).Proposed Method Implementation
 In selling a proposal (con’t)
 Second – more value capture and savings
 quality. and
other direct effects on management
objectives
 These are benefits that will be realized
later in the project life cycle
20 March 2018 Brian N. PhD. reliability (decreases in
maintenance).

I feel this issue
should be covered in the initial discussion
of the effect to the bottom line
 How will we pay for this?
 Justification  immediate value and saving
benefits. CPE 8
.Proposed Method Implementation
 NOTE:
 The book discusses the third most
important part of the presentation is
recovery of capital (or PP). PhD. Craig. intermediate value and saving
benefits. finally cost avoidance benefits
20 March 2018 Brian N.

Decision Making Tools
 Decision Tables
 Structured approach designed to take out the
subjectivity (could be an issue surrounded by
emotion and ego’s)
 Tables consist of condition-action statements 
similar to if-then statements in computer programs
and flow charts
 Another form of these tables AKA Hazard Action
Tables (probability-severity tables)  used in
safety engineering
20 March 2018 Brian N. PhD. Craig. CPE 10
.

Craig.Example
 Operation 1 – formation of the knife blade by
cutting the blade from a thin strip of stainless
steel via a foot pedal operated press
 Using tweezers the operator procures a rubber nib
from a parts bin and inserts it over the blade to
protect it
 After press activation. PhD.Decision Tables . CPE 13
. the cut-off blade is placed
on a holder plate for later assembly into the
handle
20 March 2018 Brian N.

and ankle pain
20 March 2018 Brian N. PhD. a
stereoscope is used to assist in the
operation
 Operators have complained about wrist.Example
 Because of the small blade size. CPE 14
.Decision Tables . Craig. back.
neck.

Example
 Assumption: the productivity increases
in the following table are based on
MTM-2 (CH 13) and the injury
reductions are based on the CTD Risk
Index (Figure 5-25)
20 March 2018 Brian N. CPE 16
. Craig. PhD.Decision Tables .

PhD.Value Engineering . Craig. CPE 22
.Example
 Operation 1 – formation of the knife blade by
cutting the blade from a thin strip of stainless
steel via a foot pedal operated press
 Using tweezers the operator procures a rubber nib
from a parts bin and inserts it over the blade to
protect it
 After press activation. the cut-off blade is placed
on a holder plate for later assembly into the
handle
20 March 2018 Brian N.

Value Engineering . CPE 23
. PhD. Craig. a
stereoscope is used to assist in the
operation
 Operators have complained about wrist. back.
neck.Example
 Because of the small blade size. and ankle pain
20 March 2018 Brian N.

CPE 25
. Craig. PhD.Value Engineering .Example
 Assumption: the productivity increases
in the following table are based on
MTM-2 (CH 13) and the injury
reductions are based on the CTD Risk
Index (Figure 5-25)
20 March 2018 Brian N.

and 8 are assigned to
the three factors of interest
 Increased productivity (6)
 Decreased injury rates (4)
 Low cost solutions (8)
 Each solution is rated from 0 to 4 for each of
the factors
 Not very quantitative and very subject to bias
20 March 2018 Brian N. 4. Craig. CPE 27
. PhD.Value Engineering .Example
 The weights of 6.

Craig. maybe use percent
changes.
then you should be able to assign a monetary
value to that
20 March 2018 Brian N. CPE 31
. injury numbers.Cost-Benefit Analysis
 Step 2 can be very challenging to gather and
quantify
 If not possible to assign $ values (but remember
earlier in the lecture about speaking in terms
management understands). or other
 My argument would be  if you can get
percent changes. and many other metrics. PhD.

the cut-off blade is placed
on a holder plate for later assembly into the
handle
20 March 2018 Brian N.Example
 Operation 1 – formation of the knife blade by
cutting the blade from a thin strip of stainless
steel via a foot pedal operated press
 Using tweezers the operator procures a rubber nib
from a parts bin and inserts it over the blade to
protect it
 After press activation. CPE 33
.Cost-Benefit Analysis . PhD. Craig.

a
stereoscope is used to assist in the
operation
 Operators have complained about wrist.Example
 Because of the small blade size. Craig. PhD. CPE 34
.
neck.Cost-Benefit Analysis . back. and ankle pain
20 March 2018 Brian N.

Cost-Benefit Analysis .Example
 Assumption: the productivity increases
in the following table are based on
MTM-2 (CH 13) and the injury
reductions are based on the CTD Risk
Index (Figure 5-25)
20 March 2018 Brian N. PhD. Craig. CPE 36
.

CPE 40
.
 You are trying to convince a potential
client that investing in an ergonomic
chair(s) will be a solid investment
20 March 2018 Brian N. Craig.Alternate Method of Cost Justification
 You are a consultant/sales
representative. etc. PhD.

Alternate Method of Cost Justification

 KEEP IT SIMPLE  your customer must
understand the logic
 Do NOT insult their intelligence
 Do NOT make them feel uncomfortable

20 March 2018 Brian N. Craig, PhD, CPE 41

Alternate Method of Cost Justification
 A simple 1 pager
 Step-by-step
 Show investment (cost)
 Show BENEFIT ($) and TIME to attain that benefit
 Have supplemental materials to back up your claims
and fully understand these materials
 Peer reviewed, scientific journals  NOT anecdotal
evidence - FIRST
 THEN backed up by newspaper, magazine, and other
satisfied customers (companies/corporations) and
success stories (to show practicality/functionality of
your solution)
20 March 2018 Brian N. Craig, PhD, CPE 42

84 - 6.25 = 77.75 x $80.00 = $6,220.00
Chair Life in months Monthly Total Productivity
(industry average is Months of "free" life Productivity Opportunity per
7 years = 84 (after the chair has paid Opportunity Employee over the
months) Payback Time (months) for itself) per Employee Life of the Chair

20 March 2018 Brian N. Craig, PhD, CPE 43

PhD. while the
alternative may use special equipment at a
higher capital cost. CPE 44
. but higher set-up cost. Craig. but lower set-up costs
20 March 2018 Brian N.Decision Making Tools
 Breakeven Charts (Crossover Charts)
 Useful in deciding which of two alternative
methods changes to implement
 One methods change may have low capital
cost.

Decision Making Tools
Total Cost
2 better than 1
2 better than Old
1 better than Old
Parts Produced
20 March 2018 Brian N. CPE 45
. Craig. PhD.

PhD. it does NOT consider the
original investment required to get started
20 March 2018 Brian N. or increase in dollar
value added to the product based on the
pessimistic estimate of life of the product
 This ratio provides information on the
effectiveness. Craig.The Return on Sales Method
 Computes the ratio of
 The average yearly profit brought about through
using the method and
 The average yearly sales. CPE 48
.

PhD. based on the
pessimistic estimated life of the product
and
 The original investment
 The method of choice would maximize
this ratio (high profit and low
investment)
20 March 2018 Brian N. Craig. CPE 49
.Return on Investment Method
 Provides a ratio of
 The average yearly profit brought about
through using the method.

CPE 50
. Craig.Payback Method
 The reciprocal of the return on
investment
 Calculates the amount of time that it
would take to realize a full return on the
original investment
20 March 2018 Brian N. PhD.

011 in five years OR
 Receiving $1 five years from now may be
like having about $0.Discounted Cash Flow Method
 Computes the ratio of
 The present worth of cash flow.50 today
20 March 2018 Brian N. Craig. based on a
percentage return and
 The original investment
 Utilizes the time value of money
 $1 today @ 15% compound interest =
$2. PhD. CPE 51
.

$11.000 capital investment will take
3. CPE 61
. Craig. PhD.09 years
 The cash flow analysis reveals the original investment will
be recovered in less than 4 years while earning 10%
 During the 10 year anticipated life of the product.Conclusion of Example of These
Methods
 The new method satisfactorily passes all three (four)
appraisal methods
 A 61% return on sales
 A 32.3% return on capital investment
 The return on the $10.566
more than the original investment will be recorded
20 March 2018 Brian N.

Craig. CPE 62
. PhD.Action Items
20 March 2018 Brian N.

cost avoidance issues)
– a one-pager. Craig. PhD.Proposed Method Presentation
 Written and oral presentation
 Summary is the most important part
 Present first thing (“need to know” for executives)
 Contain 3 elements
 Brief explanation the nature of the problem
 Recommendations (proposed method changes) and
Benefits (immediate financial benefits. like most of you did in lab
20 March 2018 Brian N. intermediate
financial benefits. CPE 63
. if possible.

even though that is a major motivation
for job change
 Know your audience!
20 March 2018 Brian N. CPE 67
.
etc. Craig. PhD.Resistance to Change
 Rule of thumb  stress the positives for
the operator
 “Easier to use”
 May stay away from “increased efficiency”.

Craig.Americans with Disabilities Act
 Any method changes and during any
job performance evaluation  must
consider the ADA
 Passed in 1990
 “…outlaw discrimination in employment
against a qualified individual with a
disability”
 Any employer of 15 or more employees
20 March 2018 Brian N. PhD. CPE 69
.

seeing. Craig. breathing. PhD. CPE 71
.Americans with Disabilities Act
 The ADA protects any individual “with a
physical or mental impairment that
substantially limits a major life activity”
 Substantial implies something more than
minor. or working
 Temporary injuries are not covered
20 March 2018 Brian N. manually feeling or manipulating.
walking. while “major life activity” includes
hearing.
learning. speaking.

CPE 72
. PhD. Craig.Americans with Disabilities Act
 The individual with the disability must
be qualified to perform the “essential
functions” of the job with or without
“reasonable accommodation”
 Essential functions = basic job duties
that an employee must be able to
perform
 Essential functions from job analysis
20 March 2018 Brian N.

Americans with Disabilities Act
 “Reasonable accommodation = any
change or adjustment to a job or work
environment that allows the individual
to perform the essential functions of the
job and enjoy the benefits and
privileges that all employees enjoy
20 March 2018 Brian N. Craig. CPE 73
. PhD.

Americans with Disabilities Act
 A reasonable accommodation is one
that does not place undue hardship on
the employer
 Not unduly costly. extensive. Craig. PhD. substantial. CPE 75
. or
disruptive
 Does not fundamentally alter the nature or
operation of the business
20 March 2018 Brian N.